Lone Star Funds, the private-equity firm founded by billionaire John Grayken, will invest as much as 500 million euros ($565 million) this year buying land for Spanish housing developments as demand picks up.

Spanish consumers helped push the pace of growth to the fastest in eight years in the second quarter, as domestic demand reinforced its position as the main driver of the recovery.

European real estate loan sales this year are unlikely to be materially disrupted by the current China-led volatility gripping global markets, predicts Deloitte, with around €80bn worth of loan portfolio deals expected to close by the end of the third quarter and another €40bn in preparation.

The popularity of alternative investments is growing rapidly among minority investors, indicating a paradigm shift not seen since the advent of exchange-traded funds in 1993.         

Institutional investors have, for a long time, used alternative strategies, a broad category which includes everything from real estate and private equity to hedge funds and private-placement debt, as a vital tool to cover the risk of more traditional long-term strategies, which make up most of their equity portfolios.

U.S. investor TIAA-CREF and Swedish National Pension Funds AP1 and AP2 have teamed up on European office investments.

Their joint venture will combine €2.2 billion ($2.5 billion) worth of 15 properties already owned by the firms, and over the next three years will aim to buy another €2 billion of office space.

By merging the property portfolios, “we’re going to be able to diversity our European office portfolio without any more capital requirements,” said Phil McAndrews, chief investment officer of TIAA-CREF Global Real Estate.

The groups plan to make further office acquisitions in Europe, focusing on London, Paris and cities across Germany.

Bankia SA is preparing to sell 4.8 billion euros ($5.4 billion) of Spanish residential and commercial property as international investors return to the nation’s real estate market.

The Madrid-based lender is offering 3.3 billion euros of residential properties, 1.1 billion euros of commercial units and land valued at 400 million euros, according to a document sent to investors by Credit Suisse Group AG, which is advising Bankia on the deal.

Los Angeles-based Ares Management has reached an agreement to acquire a 2,583,000-square-foot pan-European office portfolio from IVG Institutional Funds.

The portfolio of 30 properties located across six European countries, including the UK, France, the Netherlands, Belgium, Finland and Spain, has been valued at more than €400 million. 

“We believe this portfolio provides several compelling asset management opportunities, including the ability to create significant value from leasing,” Bill Benjamin, partner in the Ares Real Estate Group, commented. “It also fits with our strategy to deliver upside growth through diversification across geographies and asset types for our investors.”

European real estate loan portfolio sales is expected to ramp up from next month with as much as a further €84bn in planned disposals expected to close before the year end, taking annual volumes to almost €140bn capping the fastest pace of bank deleveraging in this cycle.

European banks are set to divest a record 139 billion euros ($154 billion) of loans this year, led by the U.K., as the industry accelerates asset sales to meet new rules, according to PricewaterhouseCoopers LLP.

As well as increased volumes, higher prices are being driven by continued demand from investors and favourable debt markets allowing investors to leverage many transactions. Continued calls from stakeholders for banks to continue with their necessary restructuring and deleveraging – prompted in part by last year's Asset Quality Review – has acted as a further prompt to a number of banks. 

Euro-area economic growth unexpectedly slowed last quarter the region’s three largest economies fell short of estimates, highlighting the fragility of the recovery amid uncertainty surrounding the global outlook.

A property company owned by Amancio Ortega, the world’s second-wealthiest man, said profit almost doubled last year as Spain’s economic recovery gathered momentum.

Individual and corporate investors from China have been buying up properties in the major cities of Europe, especially in London, for a number of years. Following recent turmoil in China's stock market, many European markets are welcoming a further influx of Chinese investors.

U.S. investors are buying European commercial property at a record pace as the dollar’s eight-month rally and struggling economies on the continent make offices, shops and warehouses cheap.

U.S. spending on European commercial real estate last year was just short of the 2007 peak, according to Real Capital Analytics Inc. The record may be broken this year after a strong first quarter, said Simon Mallinson, RCA’s managing director for Europe, the Middle East and Africa. 

“With the U.S. markets becoming increasingly expensive and with the currency advantage we are starting to see, the U.S. institutions are making a big push for Europe,” said Richard Divall, head of cross-border capital markets at broker Colliers International. “Europe is the region of the world that still has distress.” 

An average of US$15.0 billion per year will flow out of the Middle East into direct real estate globally in the near-term, with investors from the region increasingly targeting U.S markets, according to the latest research from global property advisor CBRE Group.

The Middle East continues to be one of the most important sources of cross-regional capital into the global real estate market, with US$14.0 billion invested outside of the home region in 2014—the third largest source of capital globally. Qatar, driven by its sovereign wealth funds (SWFs), was by far the largest source of outbound capital with US$4.9 billion invested. Saudi Arabia has emerged as a significant new source of capital globally, investing US$2.3 billion in 2014, up from almost no reported investment in 2013.

In the second quarter of 2015, the Spanish economy’s external competitiveness gained in relation to the EU, based on the Consumer Prices Index (CPI). This improvement was caused by the depreciation of the euro against these countries’ currencies, as well as by the bigger drop in prices in Spain compared to the average prices in the rest of the EU.

The Spanish economy has been growing for two years, following the extended double-dip recession in 2008-13 (see chart). The recovery was initially lacklustre but it picked up in the spring of 2014 and has sparkled particularly this year, with growth of 0.9% in the first quarter (an annualised rate of 3.8%) and 1% in the second quarter. Unemployment remains troublingly high, at 22.5% in June, but has fallen sharply from its peak of 26.3% in early 2013.  

Spanish industrial production rose the most in more than five years, adding to a string of positive data as the economic recovery gains momentum.

While Spanish manufacturing and services output accelerated in April at the fastest pace since 2006, France’s economy neared stagnation, London-based Markit Economics said on Wednesday. A composite Purchasing Managers’ Index for the euro area slipped to 53.9 from 54 in March, compared with an April 23 estimate of 53.5. A reading above 50 indicates expansion.

Housing sales in Spain increased by 17.0% year-on-year in June to 30,578 units, of which 78.3% were existing homes, according to the figures released by the Spanish Statistical Office. The number of existing home sales increased by 44.5%.